Reckitt Benckiser Group Plc fell after Chief Executive Officer Laxman Narasimhan said he will step down at the end of the month in a surprise move, leaving the Nurofen maker with an interim leader.
(Bloomberg) — Reckitt Benckiser Group Plc fell after Chief Executive Officer Laxman Narasimhan said he will step down at the end of the month in a surprise move, leaving the Nurofen maker with an interim leader.
The shares’ 5.7% decline in London early Thursday reflects investor disappointment at the departure of a CEO who steadied the UK consumer goods company after a turbulent period under his predecessor.
Reckitt said Nicandro Durante, currently senior independent director, will step into the role of CEO while the board considers a longer-term replacement for Narasimhan, who’s leaving to pursue a new opportunity in the US where his family home is located.
It’s a surprise move for an executive who only joined in 2019 and was making headway in restructuring the company and unwinding the missteps of former chief Rakesh Kapoor, most notably the highly priced takeover of Enfamil infant formula maker Mead Johnson.
When Narasimham joined Reckitt, he was an outsider who had previously worked at PepsiCo Inc. and McKinsey & Co. The UK consumer goods company at the time wanted fresh leadership after Kapoor’s tenure was marred by a cyberattack, production glitches, a failed product launch and a sluggish performance by core brands.
The digital-savvy CEO has revamped the consumer health business, best known for making Nurofen pain relief tablets, which had gone from a strength to an area of investor concern under Kapoor. Narasimhan also took strategic moves to sell parts of the portfolio, such as the company’s infant formula business in China.
In July, Reckitt raised its sales forecast as it weathered soaring inflation and benefited from an infant formula shortage in the US that boosted demand and prices.
The news of Narasimhan’s departure is disappointing given the ongoing changes and improvements just starting to happen at Reckitt, said James Edwardes Jones and Emma Letheren at RBC. They added that they “also can’t help but think that an ex-tobacco executive doesn’t seem well placed at the head of a company focused on consumer health.”
Read More: Reckitt Tumbles Most in a Year on Sudden CEO Change: Street Wrap
Durante, 65, is the longest-serving board member at the consumer goods company and was previously British American Tobacco Plc’s chief executive officer. The executive, who holds both Italian and Brazilian citizenship, spent most of his career at the tobacco company, working in various roles in the UK, Hong Kong and Brazil, before running the group for nine years until 2019.
When he left BAT, with a generous exit package, he said he didn’t plan to take on another FTSE 100 executive role and wanted to be with his family in Brazil.
Reckitt said Durante will move from Brazil to the UK and receive relocation expenses and a salary of £1.1 million ($1.3 million). He’ll be eligible for a bonus and participation in the company’s long-term incentive program.
“Reckitt should be able to keep its course toward accelerating growth with long-term senior director Nicandro Durante, given his successful track record of leading BAT through tough regulatory changes,” said Diana Gomes, a Bloomberg Intelligence industry analyst. She added that BAT’s shares gained 30% plus until Durante’s exit in 2019.
(Updates with share price, analyst comment from second paragraph)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
